Battle for the Gas Valve
Pfäffikon SZ, Switzerland – After some simmering down of the credit crisis – which by no means has blown over yet – investors and the media are shifting their focus towards the age old energy problem. The recent turbulence in Ukraine has been a wake up call for many involved parties. Russia is typically seen as the evil genius in the conflict, however, I would contend that the West would be best served by applying a more nuanced view of the situation. It would go without saying, for me, that Ukraine has to pay its dues and that an excessively cheap gas price is not a given. Moreover, I’m observing EU leaders displaying curious behavior in the relationship with Russia.
More Unrest
For that reason it’s not unexpected that the Russians will want to sell their gas elsewhere. My guess would be that Asia will receive the Russians with open arms. The transparent power play on part of the EU comes across as feeble and curious. The EU might want a lot, but is not in a position to demand a whole lot. It is notable that the EU is telegraphing powerlessness as more instances of unrest begin to surface at the peripheries of the union. It’s a dangerous and clear pattern. The EU defense budgets for instance are upsettingly small; the troops are sent into battle with percussion pistols. An important focal point in the current era for naive European politicians. Defense, in my view, should promptly be put on the European agenda.
Labrador of the US
It is wise for the EU to reevaluate its energy policy. The conclusion will be that a lot of money and time needs to be invested to give shape to a better diversification of the EU energy needs. The EU will likely need to involve energy sources from other continents to become less vulnerable. This begs for an innovative energy policy where The Netherlands, specifically, can play a leading role. That’s why I don’t understand why prime minister Mark Rutte – just as his predecessor Jan-Peter Balkenende – behave towards the US as tail wagging labradors. The US is a great ally of The Netherlands, but so is Russia, moreover the history with Russia is much richer. In this regard there’s a tough puzzle to solve for the politicians in The Hague.
Not Selling Gas
Lastly I’d like to note that The Netherlands plays a distinct role within the EU with its own gas reserves in Slochteren. The exultation of Dutch gas sales profits has been thorn in my side for decennia. What’s more, from an investment and defense point of view it’s not smart, and even irresponsible, to continue with the selling of Dutch gas. Now that the fight for the gas valve is flaring up, it would bode well for The Netherlands to prepare her own policy for the new future.
The Dutch ambition to become one of the important gas hubs of the EU, is a great plan in my opinion. But with one caveat: without the sale of Dutch gas. Next generations need the gas reserves in Slochteren a lot more than we do now. The battle for the gas valve has only just begun.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above shares and has no intention of doing so in the next 72 hours.
